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PEER COMPANIES

Several stocks are trading at record highs but there are some that have not exactly been market favourites. ET spoke to research heads at various brokerages to know their contrarian picks, which they feel can outperform in the near future:

The market is not giving the right valuation to the business. It is one of the two gold finance companies with a panIndia presence. It is trading at 2.5 times book value, which is attractive. The stock can give 20-25% return in one year.

M&M Financial Services | CMP: Rs 349.80 | YTD Change (%): 29.5

The company has gone through NPA stress but it can perform well going ahead as monsoon is expected to be good, collateral has started to improve at the ground level. We believe the stock can deliver 20-25% return in a year.

DHANANJAY SINHA, Head of research, Emkay Global Financial Services

Emami | CMP: Rs 1,116.10 | YTD Change (%): 16.7

In general, institutional investors are underweight the consumer sector relative to the Nifty. We believe Emami is a good rural play and can cross `1,200-level. We see an upside for fast moving consumer goods space in the next three years.

Pharma sector has been coming off and we expect some more let down there but within the sector we like Aurobindo Pharma as its US generic launch visibility is good. The growth dynamics are good so it should continue to hold up.

The stock has been largely ignored except in the last 6-8 months. It is largely underowned by MFs and bare minimum value for Jio is being factored in. Incremental subscriber additions are strong. I expect the stock to touch Rs 2,000 levels.

ICICI Bank | CMP: Rs 320.6 | YTD Change (%): 25.6

As NPA resolution starts with RBI fast-tracking the process and private sector capex recovers, ICICI Bank should benefi t. Also, there is little margin of safety in other private banks. ICICI Bank can give 25-30% return in a year.

PANKAJ PANDEY, Head of research, ICICIdirect

EIH | CMP: Rs 128.8 | YTD Change (%): 35.6

EIH doesn’t have a balance sheet issue. We expect its fi nancials to improve after one year as its Delhi property is under renovation. Post that improvement in ARRs and occupancy rates in the industry would help it deliver strong earnings.

Wabco India | CMP: Rs 5,678.35 | YTD Change (%): 9

By April 2020, BS-VI norms will be implemented so content per vehicle should go up and that should benefit Wabco. The stock appears attractive given the interesting opportunity it could cater to.